Want to Get the House You Want? Here’s How to Write a Lender Friendly Purchase Contract
CAR Purchase Contract
In our seller’s market, most successful home buyers tailor their purchase contract to meet the needs of the home seller. What some buyers and their agents fail to take into account is that they also need to tailor the contract to meet the needs of the lender. If they don’t, they may be hit with delays in funding or worse yet, they may not be able to get the loan funded at all. Below are five things buyers should think about when crafting a lender friendly purchase contract.
- Make sure all borrowers are listed on the contract by name. This sounds simple, but you would be surprised how often one of the borrowers is left off the contract.
- If there are any reports mentioned in the contract and/or references made about the property’s condition, they can be subject to the underwriters asking for the reports and requiring that the repairs be fixed prior to funding the loan.
- Any credits for Non Recurring Closing Costs (NRCC) should be for an amount up to the actual dollar amount of the NRCC’s. To often agents put the NRCC dollar figure above the actual NRCC giving the impression that the buyer is going to receive the benefit of the entire amount. Any monies above the actual NRCC will be lost to the buyer.
- Try not to include personal property in the contract. It usually is O.K. if you include the kitchen appliances or the washer and dryer but when you start asking for the big screen T.V., the surround sound system, and the vintage car, it creates problems and delays which could potentially be costly to the buyer.
- Do not ask for a rent back (or occupancy agreement) that is longer than 60 days. Lenders want to lend to owner occupants. If they think you are an investor, your rate will be higher and your qualifying criteria different.
Once a buyer receives a fully executed copy of the purchase contract, including any addenda and/or counters offers, it should be sent to the loan officer ASAP. In addition, any updates or changes to the contract should be sent to the loan officer in a timely fashion. Lastly, non permitted and non conforming additions will not be given value in a typical appraisal.
